HTC forecasts five-year low in sales for the first quarter

By Helen Ku / Staff reporter, with CNA

Smartphone vendor HTC Corp (宏達電) yesterday forecast its quarterly sales would fall to a five-year low of between NT$34 billion and NT$36 billion (US$1.12 billion and US$1.18 billion) this quarter as the company struggles to turn its business around.

That would represent a 16 percent to 21 percent decline from the NT$42.9 billion recorded in the final quarter of last year.

The company also forecast losses per share of between NT$2.1 and NT$2.6 for the current quarter, down from earnings per share of NT$0.38 last quarter, while gross margin would rise from 17.8 percent last quarter to between 21.5 percent and 22 percent this quarter.

The company posted net profits of NT$300 million last quarter because of divestment in Beats Electronics LLC shares. On an operating basis, HTC reported losses of NT$1.6 billion last quarter.

“HTC should collaborate with more telecom operators, especially those in emerging markets,” Hua Nan Securities Co (華南永昌投顧) chairman David Chu (儲祥生) said by telephone.

Unless the company makes greater innovation on product design, HTC is unlikely to make profit in the short term because mid-end and entry-level smartphones yield limited profits, Chu said.

HTC said in the third quarter of last year it planned to increase mid-end and entry-level smartphone products.

Yesterday, chief financial officer Chang Chia-lin (張嘉臨) told investors on a conference call that the company would launch a series of mid-end smartphones later this year. He declined to disclose a date for HTC’s launch of its new flagship product, dubbed M8.

“We do believe we will have a good portfolio in 2014,” he said.

Chang expects this quarter to be the low point for the company and HTC will then see “sequential increases” in revenue and profits in subsequent quarters, adding that the company would return to profitability next quarter.

Asked to comment on the HTC-Nokia settlement on all existing patent litigation announced last week, Chang said that the agreement would not have any material financial impact on HTC. He declined to give further details.

HTC yesterday also reported consolidated revenue of NT$9.67 billion for last month, the lowest monthly level since February 2009, when it posted monthly revenue of NT$9.21 billion.